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Secret Societies

November 1, 1998
by Alan Joch
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The glitterati have Cannes. Hollywood moguls have Aspen. Now the healthcare elite have Scottsdale, Ariz. Each April, top executives from 40 of the most influential integrated delivery systems (IDSs) in the country meet under the warm desert sun for the annual convention of the Scottsdale Institute. Highlights of the meeting are the afternoon golf matches. But with a group this high powered, you can bet the air is charged with more than the occasional wayward golf ball.

In the morning’s formal sessions, the top of the top healthcare providers trade war stories and company secrets about how they’re attacking wrenching problems like launching automated ambulatory systems and hospital call centers. Not surprisingly, the small size of the group is by design: Organizers want the membership to be tight-knit enough that secrets stay within the group. "Members don’t want the problems they discuss to appear in the trade media the next day," says Ralph Wakerly, First Consulting Group vice president and program advisor for the Scottsdale Institute.

The Scottsdale Institute is the lowest profile of a handful of elite healthcare organizations that are popping up to help CIOs, CFOs and other executives share problem-solving anecdotes or band together in work groups. Their elite makeup may be impressive, but some healthcare CIOs wonder if Scottsdale and similar associations like the Healthcare Advisory Board, HISEA (pronounced "high sea") and The Odin Group are merely formalized versions of "good ole boy networks." Other CIOs note that exclusivity doesn’t guarantee success. "Sometimes they read the tea leaves, and the tea leaves are wrong," says a member of the Healthcare Advisory Board.

Invitation only
Don’t feel bad if you’ve never heard of the Scottsdale Institute. Unless someone from an Allina Health System, Baylor Health Care System or Catholic Heathcare West tapped you on the shoulder and invited you to join, there’s only a slim chance that you would have run into the organization. It doesn’t conduct membership drives or advertise its services.

Unlike larger groups, like HIMSS, which takes a bigger-is-better approach, Scottsdale Institute directors agonize over how many members are too many. "Maybe the optimum number is 50 to 60 organizations," says co-founder and chairman Stan Nelson.

Small size and membership selectivity results in part by charging expensive fees. In Scottsdale’s case annual dues are $8,500, not including additional fees if a member organization joins one of the working groups.

Scottsdale is the brainchild of healthcare veteran Nelson, who with Don Wegmiller, created the Center for Clinical Integration (CCI) a decade ago. Nelson had just retired as the president and CEO of the Henry Ford Health System and was almost a cult hero among healthcare executives. Under Nelson’s leadership, the Ford organization became a pioneer in expanded ambulatory care and was one of first providers to establish its own HMO. Not surprisingly, other executives pulled Nelson from full retirement with their frequent questions about Ford’s accomplishments. "It quickly became apparent that information technology was becoming the central nervous system for healthcare," Nelson recalls. "I tested the need [for CCI] with 15 CEOs and decided a need existed."

Later, the healthcare consulting powerhouse First Consulting Group, which played a small advisory role with CCI, realized the value of the elite membership for keeping in tune with industry problems. "We see [Scottsdale] as an extension of our research function," says Wakerly. "We think the membership makeup is phenomenal."

In 1997, First Consulting acquired CCI, which changed to its present name (in honor of the site of its annual meetings) to reflect an expanded research charter. Today, First Consulting, which helps fund Scottsdale and provides technical expertise to members, is working to get formal not-for-profit tax status for the Institute.

Where do members come from? Existing members invite new candidates to join. "We look for innovation and organizations that are strong in terms of market position," Nelson says. Administrators say they haven’t shunned many organizations that wanted to join; because the Institute is so low profile, not many IDSs know it exists. "We haven’t had a lot of people applying," says Wakerly.

Those that do become members have at least one fundamental characteristic in common. "Everyone of us is chasing the Holy Grail of becoming an integrated health system," says Ward Keever, CIO of the University of Pennsylvania Health System and a four-year Scottsdale veteran.

When an IDS joins the Institute, it commits the resources of its CEO, CIO, CFO, chief medical officer, among others, in part to build better understanding among business, technical and clinical groups. Although only IDSs now populate the membership rolls, Nelson says the Institute is discussing adding health plans to the roster. "Often times health plans end up not getting the resources they need to manage their own information requirements," Nelson says.

Two groups not likely to travel to the Scottsdale meetings anytime soon are hardware and software vendors. The Institute may look like a one-stop-shopping mart for these companies, but the group shuns them. "We don’t want to become a marketing device for vendors," Nelson says.